Saturday, February 25, 2012
Bank of America to Fannie Mae: If That's the Way You Want to Do Business, We Won't Do Business with You!
Over a the two decades before the Housing bubble burst, Countrywide Financial became Fannie Mae's biggest supplier of mortgages to securitize. Gretchen Mortgenson and Joshua Rosner document the symbiotic relationship between Angelo Mozilla's Countrywide and Fannie in Reckless Endangerment. Their relationship was both financial and political as they built up the financial industrial complex that drove the financial system to ruin. Although Mortgenson and Joshua Rosner demonstrate how these two firms worked with the politicians' and the government's aiding and abetting to degrade credit quality, Fannie is now owned by the federal government. Under this new management, Fannie wants to only buy mortgages from Bank of America (Countrywide was rescued by Bank of America) on the condition that it can sell it back to the bank if they do not conform to its underwriting standards ex post facto.
You May Make the Rules, But I Do Not Have to Play the Game
Bank of America has said "No deal!" It thought it was helping out when it rescued Countrywide only to be hit with one law suit after another from the government. Bank of America has learned how the government treats those who give the country a helping hand: it bites it until it bleeds. Exposing oneself to unknown and unlimited liability is not the path to success in banking.
WSJ's David Benoit reports: